Tandem Diabetes Care Inc (TNDM) 2014 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Second Quarter Tandem Diabetes Care 2014 Earnings Call. (Operator Instructions) As a reminder, this conference call is being recorded. Now I will turn the conference over to your host, Susan Morrison, Chief Administrative Officer. Please begin.

Thanks. Good afternoon, everyone, and thank you for joining Tandem's Second Quarter Earnings Conference Call. Today's discussion may include forward-looking statements. These statements reflect management's expectations about future events, product development timelines, regulatory review process, and financial performance and operating plans and speak only as of today's date. There are risks and uncertainties that could cause actual results to differ materially from those anticipated or projected in our forward-looking statements. A list of factors that could cause actual results to be materially different from those expressed or implied by any of these forward-looking statements is highlighted in our press release issued earlier today under the Risk Factors portion and elsewhere in our most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and in other SEC filings.

We assume no obligation to publicly update any forward-looking statements whether as a result of new information, future events, or other factors.

Kim Blickenstaff, Tandem's President and CEO, will be leading today's call and, at this time, I'll turn it over to Kim.

Thanks, Susan. Good afternoon, everyone, and thanks for joining today's call. With me is John Cajigas, our Chief Financial Officer.

We made significant progress throughout the Company in the second quarter, particularly in strategic areas that are important to the long-term success of our business. Revenue, gross margin, and our R&D pipeline are three of the key areas that ultimately impact our timing to reach profitability as well as any potential capital need, and I am very happy that we were able to demonstrate positive momentum in each.

Starting with revenue, our total sales for the second quarter of 2014 grew 86% to $10.3 million compared to $5.5 million for the same period of 2013. As a point of reference, our Q2 sales were on par with our sales in Q4 of 2013, which is significant because Q4 is typically the strongest quarter of the year due to the seasonality of our industry.

If you look at our 2014 revenue for the first half of the year compared to the relative distribution of our sales in 2013, we appear to be on track to meet our revenue guidance of $48 million to $54 million for the full year.

Our year-over-year increase in sales was primarily driven by our salesforce expansion from 36 to 60 territories in the first quarter of this year. Our expansion strategy of completing it all within the first quarter was based on our learning from last year's expansion from 11 to 36 territories. It allows time for new-hire activities to be completed and for the reps to begin to become productive in advance of the Q4 peak selling season.

Timing and expansion requires significant event planning for many reasons, but especially because we need to be mindful of the disruption it can cause in the field. We experienced some of that disruption during the first quarter as every territory was realigned under the expanded 60-territory structure.

What we saw is that this disruption also impacted Q2. We saw a larger portion of our salesforce become more productive but others were still in the process of transitioning accounts and beginning to build new physician and diabetes educator relationships.

This productivity curve timing reinforces our decision to complete the field expansion in the beginning of the year so our reps can be focused and settle for the back half of the year and in Q4, in particular. That being said, even during this disruptive period our t:slim shipments for the first half of 2014 grew 79% compared to the first half of 2013, which was quite an accomplishment.

We believe the current 60 territories provide the appropriate national coverage to support the diabetes community and attract new customers and prescribers.

The next area where we saw meaningful progress this quarter was in our manufacturing operations. Our gross margin improvement is a reflection of this progress. For Q2 our gross margin was 34% up from 11% for Q1 and 7% for Q2 of 2013.

The second quarter 2014 benefited from improvements in the manufacturing process and increased production volumes. We still expect to see some choppiness in our gross margins throughout the year as we continue to scale manufacturing, identify efficiencies, and work to decrease the [units] of manufacturing overhead costs of our products. But the second quarter will play a positive role in the overall margin for the year.

Finally, over the past few months, the Company made significant progress with our new products and development. Most notably was our recent submission of a pre-market approval, or PMA, application to the FDA for the t:slim G4 insulin delivery system, which integrates our t:slim technology with Dexcom's G4 Platinum product. While our submission is just the first step of the regulatory process, and a product approval is at the discretion of the FDA, we are estimating that it will be a 12- to 18-month review cycle.

This is an important exciting milestone for Tandem, as we work to expand our product portfolio to meet the various needs of the diabetes community.

We've also made progress on t:flex, our large-volume cartridge, which holds 480 units of insulin compared to t:slim's 300 units. Following our PMA application for the t:slim G4, our internal resources turned their attention to the t:flex product. The design and development work is now complete, and we are wrapping up final tests. It will take a few weeks to compile and review the 510K, which we anticipate filing with the FDA in the third quarter and is typically a six-month review cycle.

Approval to market the t:flex is ultimately at the discretion of the FDA but we'll be developing our commercial plans with the goal of launching t:flex sometime during the first half of next year.

The t:flex is an exciting product for us, as it is uniquely designed to support the segment of the market of people with greater insulin needs and, in particular, people with type 2 diabetes who are insulin-dependent. We believe that there are 1.2 million people in the US with type 2 diabetes who use daily rapid-acting insulin and may be insulin pump candidates of which only 50,000 to 100,000 currently use a pump. So you can see why we consider this to be a significant opportunity.

I'd like to now turn the call over to John to provide further discussion on our Q2 results.

Thanks, Kim. Good afternoon, everyone. Today I'll provide some TE Metrics and color on our financial results focusing primarily on sales and gross margins for the quarter. And then I'll discuss the outlook for the remainder of 2014 and beyond.

Overall, I am pleased with the financial results of the quarter and what we've done operationally. Both are important to our achieving our 2014 guidance and our long-term goals.

As Kim touched on, the bulk of our salesforce transition is now complete, and our manufacturing organization continues to generate greater efficiencies as we scale and start to prepare to manufacture potential new products.

Also, other parts of the organization have done a very good job of improving their functions as we grow and adapt to being a public company.

Turning to our sales and product shipments, I'm very happy with the growth we've experienced both on a year-over-year basis and on a sequential basis as well. Sales for Q2 grew 86% to $10.3 million from $5.5 million in Q2 of 2013. Pump sales accounted for 85% of our total sales in Q2 compared to 91% in Q2 of 2013.

t:slim sales grew 74% year-over-year while our supplies and accessories more than tripled year-over-year. t:slim shipments for Q2 were 2,235 and grew 64% on a year-over-year basis compared to 1,363 pumps for Q2 of 2013. t:slim shipments for Q2 alone exceeded our total t:slim shipments for the entire first half of 2013. We see this as important to our prospects for achieving our growth expectations.

Similar to Q1 we believe the primary driver for Q2's year-over-year increase was our salesforce expansion during 2013 and early 2014. Increasing our sales presence has improved the visibility of Tandem as a company, and our products to our target audiences, patients, diabetes educators, and doctors.

As of June 30th, our cumulative shipments since our t:slim launch in Q3 of 2012 have grown to approximately 11,500 pumps, which we believe represents 2% to 3% of the total US insulin pump market.

Looking at our sequential sales performance, our Q2 sales grew 27% from 8.1 million in Q1. Our pump shipments in Q2 grew 30% over Q1. Items impacting Q1 that we previously have discussed with you -- seasonality and the disruption associated with our salesforce expansion -- had less of an impact in Q2 than Q1.

As a reminder, we expect our new reps to reach their steady state productivity within nine to 12 months from the date of hire. For our new reps, the first one to two months involve training and territory introductions. Generally, they begin to generate sales orders in the second or third month. Sales orders then flow through our insurance verification process, and with product shipments occurring generally 20 to 30 days later.

For our existing reps, while the salesforce expansion does not involve retraining for them, they, too, are going through a territory introduction process. Existing reps are transitioning prior account relationships to a new rep and, at the same time, meeting new accounts they previously did not cover or spent little time with. This resulted in the average productivity of our existing reps dipping down as they started to address new geographies.

Instruction is now tapering off though, for some territories, it may last into Q3. We expect the average productivity of our reps to slowly increase, going forward. We still anticipate that the latest salesforce expansion, the 60 territories, will have the greatest impact in Q4 similar to what we experienced in 2013 when we expanded from 11 to 36 territories.

Moving on to cost of sales and gross margins, I'm very happy with the manufacturing performance this year as we continue to scale and make improvements and become more proficient in our operations. Our overall gross margin for Q2 was 34% compared to 11% for Q1 and 7% for Q2 of 2013. The primary reason for the improvements in the gross margin was a decrease in the per-unit manufacturing overhead cost of our products driven by increases in our production volume.

Our gross margins on the t:slim continue to be higher than our gross margins on our supplies, and we expect it to remain higher in the future. Our future gross margins will continue to be impacted by this and other factors such as the percentage of sales channeled to distributors, a changing mix of third party payors with varying levels of reimbursement, and any new product that we may sell in the future.

Even though we've grown considerably over the past year, we are still at the relatively early stage of commercialization, so we continue to anticipate variability in our quarterly gross margins as we manage our production capacity and output, improve our processes, implement additional automated and manufacturing equipment, and continue to expand our manufacturing facilities and overall operations.

Looking at the rest of our P&L, our operating loss for Q2 was $18.3 million compared to $20.8 million for Q1 and $13.7 million for Q2 of 2013. Growth in our sales volumes, manufacturing efficiencies, and operational improvements throughout the Company have driven our ability to gain sequential operating leverage here in Q2.

Our operating expenses in Q2 were $21.8 million compared to $21.7 million in Q1 and $14.1 million in Q2 of 2013.

On a sequential basis, our operating expenses were fairly consistent while the increase on a year-over-year basis was primarily associated with the headcount growth in our commercial organization as we expanded our sales and clinical infrastructure.

Our operating loss included significant levels of noncash stock-based compensation. During Q2 we record stock-based compensation of $3.5 million compared to $3.8 million in Q1 and $0.5 million in Q2 of 2013.

Moving on to guidance, we still expect our full 2014 year sales to be in the range of $48 million to $54 million with sales being heavily back-end loaded to the fourth quarter due to the seasonality and increasing productivity of our salesforce we expect during that period. No sales from potential new products are assumed in this guidance. As a reminder of the impact of seasonality, approximately 35% of our sales last year were achieved during this fourth quarter.

We expect our operating margins for 2014 to be between negative 130% and negative 140%. This includes noncash stock-based compensation that we currently estimate could range from $15 million to $16 million. Gross margins are a key factor in our achievement of this operating margin guidance.

With respect to cash, at June 30th we had approximately $96 million in cash and investments. In July we made two large cash payments of note, we made a $1 million milestone payment to Dexcom for the filing of our t:slim G4 PMA application with the FDA. We also made a final $1 million license fee payment to Smiths under our 2012 agreement where we acquired certain rights to patents.

We expect our current cash and investments to be sufficient for our operating needs released in the next 18 months, and it could possibly last beyond that to cash flow breakeven. Key factors influencing our cash flow expectations involve rep productivity, our ability to timely file and secure regulatory approvals, and successfully commercialize potential new products such as t:slim G4 and t:flex as well as our ability to gain leverage within our operations as sales expand and new products currently in development roll out.

Additionally, we have access to an additional $30 million under our agreement with Capital Royalty, if needed.

And, with that, I'll turn it back over to Kim.

Thanks, John. To follow up on John's comments on our mix of third party payors, our sales to distributors in the second quarter was approximately 70%. When we use distributors the impact continues to be slightly lower ASPs and typically is the loss of the infusion set sales, as they often have direct supply relationships with the manufacturers.

Our goal is to shift to a greater percent of the business from distributor to payors directly, however, the timing of the contracting process varies from payor to payor. For the most part, our combination of direct payor contracts and the use of distributors has allowed anyone interested in purchasing t:slim an avenue to do so while taking advantage of their health insurance benefits.

As an update to our last call, we previously announced our signing of a national contract with Kaiser that allows us to service all of Kaiser patients in Northern California on a direct basis. Today I am very pleased to share that additional regions within the Kaiser network including Southern California, Colorado, and the Pacific Northwest have agreed to implement the national contract, and they will go live in late Q3 and early Q4.

Based on the membership information Kaiser provides publicly, our agreements will now cover approximately 90% of Kaiser's 9.5 million lives. A customer's purchasing experience as well as their training and ongoing customer support excellence is very important to us at Tandem. This is why I was extremely proud to see the results of a recent independent survey by DQ&A, which slowed t:slim ranked as number-one among insulin pumps available today both for overall satisfaction and customer support satisfaction.

This patient panel survey consisted of more than 1,200 people who gave feedback on 17 pump and pump support attributes, and t:slim was ranked number one in 14 of the 17 categories including effort required for training. The t:slim was designed based on market research to be easy to use and easy to learn with a modern look and a feature set, and I was very happy to see this recognition of our product and especially of the excellent service provided by our team who train and support people who use t:slim.

I believe this type of feedback also underscores why we continue to see that in the second quarter and in cumulative shipments today, approximately half of our t:slim customers are people who report being new to pump therapy. This is exciting because numerous studies have shown significant health and quality of life benefits that come from using an insulin pump, and I am pleased that t:slim is allowing more people with diabetes to enjoy this benefit.

Overall, I am very happy to see t:slim gain traction both with people new to pump therapy and those switching from a different pump. As John mentioned, we anticipate the year will be back-end loaded with the fourth quarter being the strongest due to the timing of when people typically meet their annual deductible and coinsurance requirements as well as the new Kaiser agreement that will be in effect by that time.

In addition to our sales efforts for the remainder of 2014 the Company will be focused on continuing to improve our operational efficiencies in bringing new products to market that will support the diabetes community.

With that, I will turn it over to the operator for questions.

(Operator Instructions) Thom Gunderson, Piper Jaffray.

Hi, guys. Kim, you mentioned that 70% coming from distributors. That's up just slightly, probably not meaningfully from Q1. But can you give us -- and you talked a little bit about Kaiser. Have there been any wins or any changes in any of private payors since the last call that you can mention?

John can answer that.

Hi, Thom. Really, it's just a steady progress. I don't think there's any really meaningful contracts besides the Kaiser one. There are some other ones that are in negotiations including large ones. But, at this point, I'd rather not discuss them until they become more meaningful and substantive.

Got it, thanks. And then my next and last question is can you talk a little bit about competition? Did you see any changes from the other companies in Q2 as you start to grow larger? And any impact from any new entrants out there?

Well, you know, I'd say the landscape is pretty much consistent with what we saw last quarter. Obviously, the Medtronic 530G is a new offering, and so they have pretty tight control over their established base. So they tend to get to their own customers first, so I think that, first and foremost, is probably the biggest competitive element out there.

And I think you know the Snap product -- the Asante Snap product I think is being launched regionally. That was down in the Southeast, and so there was some activity localized there but, really, those are the only two things that have sort of colored the competitive landscape, and that's pretty much consistent with last quarter.

Rick Wise, Stifel.

Thank you, good afternoon, Kim. Let's start with gross margin. You said -- both you and John said that you expect to see some choppiness, but help us think through some of the puts and takes as we look at the rest of the year, and a couple of questions around this -- is this 34% basically sustainable? And, sort of, however lumpily, likely to improve sequentially in the third and the fourth quarter, maybe just starting there?

Hi, Rick, this is John. Basically, if you look at 2013, you'll see -- if you look at our quarterly margins, you'll see some choppiness, and a lot of that just as we scaled up. And as I previously mentioned, a big part of, sort of, our margin story is, sort of, volume. I think us hitting 34% is very good. I think it's not -- to me, it's personally not a surprise that we would do that considering the volume that we picked up on.

I do expect our margin to increase as we move towards our long-term target, which is in the low to mid-60s, and that's going to be primarily volume-driven as well as new product entrants into our manufacturing process. You know, if you're looking more short term to now and the end of the year, I think we can still see some meaningful progress primarily because of the volume story. But we are working on a lot of things to improve, sort of, the efficiency side of the business besides the volume that I think will have some meaningful impact.

But we are the small scale that one misstep or one issue and then manufacturing could have a little bit of a hiccup. So that's why we still expect to see some choppiness because we saw it last year.

Yes, and can you give us a little more clarity on the -- sometimes in the past you've talked to us about the conversion rates -- MDI conversion rates -- versus competitive switches. Can you update us there?

There hasn't really been a substantial change on the margin of the MDI versus switches, which now remains about 50-50. So that, going forward, we sort of -- we expect to sort of see that remain consistent with that 50-50 split we're seeing right now.

Okay, and maybe last for me -- I appreciate again the salesforce is moving around and those original 36 reps, they're in different territories. Maybe can you give us any color on how many reps are at or close to peak? And you must be approaching 12-month experience in 25 or 30 reps at this point. And, again, maybe, how many of those have been moved around? Any more color on that whole productivity metric would be great.

We're probably not giving that level of granularity, but I don't think we're at 12 months peak experience for anybody. With the reset of what we did in the first quarter, every territory got reset. So if you look at a territory like New York, it had a certain geography last year that was probably cut by two-thirds, and so, really, that person is starting completely over, and that's pretty much a theme throughout that original group that we had. So I don't think we have anybody that we would say is at that 12-month peak. I think we reset everybody to zero and we're probably in the three- to five-month sort of aging time period for the majority of the salesforce.

Obviously, we need to see people having sequential gains, going forward, in order to hit our numbers for the balance of the year, which we expect to. And, obviously, there's a seasonality at the end of the year that's going to be a big factor.

Kristen Stewart, Deutsche Bank.

Hi, guys. Nice quarter on the pump placement side.

Thank you, Kristen.

I just wanted to ask -- the Dexcom $1 million that you guys had, I guess, paid to them in July, was that accounted for in this current quarter from an R&D expense basis? Or will that be something that gets organized in the third quarter?

That would be a third quarter charge.

Okay, great. And then, just, I guess, in talking with -- or keeping on that theme, I guess, with t:sensor or t:slim G4, I guess, as you're now calling it, what should we expect just in terms of dialog with the FDA? I guess, will you be having a meeting with them at some point just to go over the filings and what, kind of, gives you the confidence, I guess, behind the 12 to 18 months review process?

Well, 12 to 18 months has sort of been the experience of everybody in that PMA pathway and on the 510K side, we've consistently taken six months on that track. So I think we're just sort of forecasting what everybody else has been experiencing. And, obviously, there will be dialog. There's obviously rounds of questions as you move through the process, and I don't know that we're going to be commenting publicly on that because we move along. But it will give us better clarity as the timing, which will update people as we know more.

And the FDA did accept our filing as of today.

Great. And then just on flex again -- that, you said, within a couple of weeks, is that correct you'd be filing for that?

Yes, it's a few weeks, not just a couple of weeks. We're basically in the process now of gathering the filing and putting it together, and it's going to go through a review book, in turn, on it legally, and then we'll be submitting that as soon as we're done.

Okay, perfect. Thank you, guys. Congrats again.

Thank you.

Bob Hopkins, Bank of America.

Good afternoon. So a couple of things. First, just on the guidance. You mentioned that last year, roughly, 35% of the year came in the fourth quarter. Is that what we should expect for this year as well, in your view? Roughly, 35% of the year coming into the fourth quarter?

I'm not giving specific guidance on the fourth quarter, but if you look at, sort of, what we did in 2013, we went to an expansion. And even through that expansion you can see what the impact was, and it was heavily back-end loaded to the fourth quarter. And it was, roughly, 35% and that is sort of on a GAAP basis, and I just want to remind you that in Q1 of last year we recognized $1.9 million of product shipments that were actually shipped the prior year because of the deferred revenue accounting. So if you just look at activity, it's probably closer to 37% on a sort of non-GAAP basis.

Yes, but that 35% is sort of the industry average, as well, right, John? In terms of seasonality spread, so we wouldn't expect something much different.

Okay, just curious there. I mean, the street consensus is, I think, above 35% already, anyway. So just curious as to the message you're trying to send there on the guidance.

And then two other quick things. First, in terms of the cash position and the cash burn, just curious as to when you might consider raising equity again, and I ask because at the time of the IPO you made it pretty clear to everybody that this IPO was not necessarily going to get you to profitability; that you might need to do another raise before you get there, and so I'm just curious as to when you look at the business today, the cash burn today, the cash level today, do you think 2015 is the year where you may need to do another equity raise?

Our cash expectation is minimally 18 months. I think, really, for us, it depends on how the productivity ramp for the existing salesforce plays out as well as when and if we get approval for t:sensor and t:slim G4 and t:flex and what that does to it.

I think we have a comfortable sort of runway to be able to see that into next year before deciding whether or not we need to raise cash. And so, really, it's sort of looking at middle 2015 before we can get to a point where we might need to, sort of, do something on that.

Okay, that's helpful. And then -- ?

And then the other piece of that is we still have access to $30 million on our Capital Royalty, which we can draw up until March 31st of next year, and that will actually extend the runway for us to make that decision.

Okay, thank you for that. And then, lastly, for me, just trying to gauge your confidence in the back half of this year. And the reason I ask is that since the IPO, the quarters that you guys have been delivering has been a little bit less than the Street has been forecasting. And the rep productivity that you need in the back half is substantially greater than you've experienced during the first half, and I think we're all aware of some of the things that have gone on. But maybe if you could mention some of the things that give you confidence in the back half guidance, given the things that have gone on, so far, this year, that would be helpful and appreciated. Thank you.

Well, I think we've drawn our experience from our expansion from 11 territories to 36 and what we saw there in terms of rep timing of productivity improvements and how that all sort of played out during the course of the year.

The first quarter of the year is always the most challenging one, and so it was sort of own our expectations for how much, sort of, disruption we had that was self-inflicted by trying to do this expansion in that quarter as well as the relative distribution of sales volumes throughout the year.

So the only thing I could say is we will see these productivity gains in the second half of the year contributed both by, I think, seasoning of the reps and by the seasonality spread. And so those two factors, I think, are real. We've seen them both in the prior year, and that's the best forecast we have right now.

And do you think Kaiser can really help in the back half and are there other contract wins that you may be expecting over the course of the rest of this year?

Well, I think those were our headwinds last year. We basically were locked out of Kaiser, so I think that really opens up a third of basically the patient population here in the state of California. So we're going to have several happy reps here in California that will see less of a headwind for them getting volume gains.

And on the (inaudible) care front, we are in the middle of negotiations with several payors out there including a couple of large ones. And I am hopeful that we'll have those done, and they will impact the remainder of this year at some point.

Scott Schaefer, William Blair.

Just two quick ones for me. In terms of the guidance, a question on the op margin. A couple of things that obviously helped this quarter, the increase in the gross margin was a nice increase. The contract wins will help those margins, going forward, and even some of the operating expenses came in a little lower than we had expected. I guess what's your expectations for the second half where you would reiterate the guidance of $130 million to $140 million?

Well, you mentioned the previous question. I think gross margins will play a story in that if we continue to see the improvements we expect. The other aspect of that is sort of our management of our operating expenses, and I think we did a very good job this quarter of managing to, sort of, an almost flat level.

I do expect them to increase as we move along. We've got a couple of large tradeshows we participate in in the third quarter, plus a lot of our expenses are employee-oriented, and if we do very well then commissions and bonuses also sort of ramp up as we move along. And then also I mentioned the two charges that will be sort of impacting the Q3 numbers as well.

So I think that's sort of the play of that. I think that sales is going to be a big part of it hitting the operating margin as well as the gross margin impact and just having the volume out there.

All right, thanks, that's helpful. And then one other one on the external pump and the way that's reimbursed and the warranty on that. Is that covered for the entire four to five years that the patient is on that? And if it does break, do you guys see any incremental revenue from any kind of replacement hardware?

So we do have a four-year warranty on the pump, and it is replaced or fixed at that point. So as far as incremental revenue related to warranty, currently we don't have that.

Okay, and then one quick other one. You said in terms of expansion of manufacturing facilities, I know you said t:flex would be somewhere in 2015 and, obviously, some other new products rolling out. Do you plan on increasing or expanding the facilities and what do you think that could do for margins?

I think, overall, we are expecting to expand our facilities from a corporate standpoint. We just recently here in the second quarter at the end, added about 20,000 square feet to our, sort of, footprint. But the manufacturing is generally contained in one area, and new products are generally going to be using the existing facility that we have today. There will be some incremental investments for some ancillary equipment and some things that are unique to the new products that are on our current product today. But, for the most part, we are not rebuilding manufacturing facilities for new products in whole.

Thank you, no further questions at this time. I will turn the call over to management for any closing remarks.

Okay, thank you very much. Thanks, again, everybody, for joining us this afternoon and thanks for the questions that we just answered. The Company will have representatives heading to Orlando next week for the American Association of Diabetes Educators Annual Meeting, which is August 6 through 9. This is an important meeting for Tandem as we believe Certified Diabetes Educators play a vital role in supporting people with diabetes. We continue to look for ways to partner with the diabetes community to build awareness of pump therapy and of t:slim's sleek modern design and easy-to-use interface.

So, in conclusion, I was pleased to see positive momentum this quarter throughout the Company and especially in the first half of the year. I look forward to keeping you updated on our progress in future conference calls. Thanks for joining us.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Have a wonderful day.